Magazine March 5, 2012, Issue

The Central Plan

(Roman Genn)
Our president has one, unfortunately

Conservatives recoiled when Barack Obama declared his desire to “spread the wealth,” the phrase being redolent of Johnsonian welfare-statism, and many on the right promptly denounced him as a “socialist.” But that is silly: Being a spread-the-wealther does not make one a socialist — it makes one a conventional politician in a modern liberal democracy (alas). Being a central planner makes one a socialist, socialism being the philosophy of imposing central planning on an economy in place of markets, and it is on that count that President Obama may be indicted and convicted of practicing the dark arts of socialism. From his hallmark health-care legislation to his broader economic philosophy, President Obama is the most committed central planner to occupy the Oval Office since Woodrow Wilson.

There are two species of central planner: the authoritarian and the progressive. Each species has its distinctive markings and characteristic habits: The markings of the authoritarian central planner are epaulets and a peaked cap, and generally some braid about the shoulders, and his distinctive habit is putting his boot on your face (forever). The progressive species is generally to be found in blue suits talking jabberwocky in front of joint sessions of Congress. Obama is a specimen of this latter type, though the two species share a preoccupation with quantifiable economic abstractions divorced from real-world economic activity. The presence of figures is soothing to the central planner, as it enables him to present to the public as science (remember Friedrich Engels and his “scientific socialism”) what is in fact merely political occultism. It is for this reason that Barack Obama’s forceful economic declarations — exports shall be x! unemployment shall be y! — are to conservative ears indistinguishable from those found in the five-year plans of various single-party states — the wheat crop shall be x! the potato harvest shall be y!

It is important for the central planner that these figures be carefully insulated from real economic activity. President Obama, in his 2010 State of the Union speech, boldly promised to double U.S. exports in five years. This is the sort of thing that sounds impossibly audacious and visionary, until you think about it for a second. (Fortunately for President Obama, “think about it for a second” does not describe the usual habits of the American voter.) When Barack Obama was elected in 2008, U.S. exports were growing at a rate of 12 percent annually, meaning that, in nominal terms, they would have doubled in just under six years if the current trend simply had continued. In fact, export growth already was likely to pick up beyond that as high levels of demand in Asia and elsewhere drove up prices for important U.S. exports such as agricultural products, chemicals, and industrial components. President Obama was promising only to achieve that which was going to happen anyway. The purpose of his trade initiative was not to increase trade, but to impose his political will on the economy.

Vice President Joe Biden had some months earlier provided an indicator of what that vision looks like: electric cars. Never mind that the market for electric cars is minuscule, that the better ones cost as much as Maseratis, that the underlying technology remains insufficient to the transportation needs of most commuters: We are to have electric cars, because the central planners say so. The poor Russians didn’t need a bunch of sausages made out of toilet paper (sobachya radost) either. National economic policy may be hostage to the president’s love of The Jetsons, but reducing the trade deficit provides the economic rationale for imposing politics on the markets. During a speech at Fisker Automotive, a manufacturer of high-end luxury electric sports coupes, Vice President Biden dared to dream: “Imagine a world where people pop the hood of their cars, and they see stamped on the battery ‘Made in America.’” After receiving a half-billion dollars in support from the U.S. government, Fisker had the bad taste to lay off many of its U.S. workers — in Biden’s home state, Delaware — and stamp its cars “Made in Finland,” where it began manufacturing.

#page#That means, of course, that Fisker sales will contribute to the U.S. trade deficit rather than reduce it, and the trade deficit is a great quantifiable abstraction that sends progressive central planners into fits. So bothered by the trade deficit is President Obama that he seeks to impose his political will not only on the U.S. economy but also on the Chinese economy, demanding that Beijing revise its monetary policy and its trade rules to favor American exports. If they hadn’t been paralyzed with laughter, the central planners in China might have pointed out to President Obama that the single largest contributor to the U.S. trade deficit is not cheap Chinese manufactured goods but a single non-Chinese commodity: oil, which accounts for one half of the deficit. As it happens, the Obama administration has been busily undermining domestic energy production in the United States, because its central-planning manifesto says that the U.S. economy should cease to run on petroleum and begin to run on other forms of energy: wind, hydro, geothermal — air, water, and earth being the favored elements, fire being in the political doghouse. (Like I said: occultism.) In his latest budget proposal, President Obama proposes to continue offering tax benefits to U.S. manufacturers in the hope of increasing exports, but he intends to exclude from that benefit energy firms — which just happen to be positioned to export a great deal of natural gas to a world market hungry for the stuff, with Japanese demand particularly acute as the country transitions away from nuclear power in the wake of the Fukushima disaster.

So we are to double our exports, which were going to double anyway, but we’re to do so by favoring goods that nobody wants and that are not made here (Fisker) over goods that are made here that everybody wants (petroleum) and that just happen to fall into the category of goods that represent the majority of our trade deficit. There are no competent economic central planners, but there is a spectrum of incompetency, and the Obama administration is in the wrong end of it. They are the sort of central planners for whom one wants to organize a telethon.

The administration’s central-planning impulse was most strongly displayed in the drafting of the Patient Protection and Affordable Care Act, which was prefaced by a sober-mouthed national debate about another set of quantifiable abstractions: the number of uninsured Americans (45.7 million!), the trajectory of health-care costs (up!), the share of GDP dedicated to medicine (more than the Swiss!), etc. Again, the abstractions must be carefully separated from the realities. Of those 45.7 million uninsured Americans, a lot were not uninsured (they were covered by Medicaid, CHIP, and similar programs) and many were not Americans (non-citizens were counted). Some were rich people who didn’t need or want insurance (Bill Gates can just pay his doctor). Etc. Keith Hennessey, former director of the National Economic Council, calculated that the actual number of Americans who were uninsured because they could not afford insurance was 10.6 million. The average cost of an insurance policy for a single person in 2011 was $5,429, meaning that we could have just bought insurance for all those uninsured for about $58 billion a year. The Obama administration says PPACA will cost about $93 billion a year, not quite twice what it would cost to just buy people insurance, whereas former Congressional Budget Office director Douglas Holtz-Eakin calculates that the program will end up costing about $893 billion a year, or 15 times what it would cost to just buy people insurance. But Obama is not a spread-the-wealther — he’s a central planner. He does not want to buy Americans insurance — he wants to dictate that the insurance cover this situation in that way for this cost under those conditions, with abortifacients sprinkled over the entire mess for good measure. He does not desire to stimulate the economy, but to stimulate this sector of the economy in that way to achieve these outcomes for those cronies. (No? You explain Solyndra, then.)

When President Johnson signed the Food Stamp Act of 1964, he was just spreading the wealth. Obama wants to take over the farm.

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